Russia’s President Adopts New Decree on Forced Takeover of Businesses

Russia’s president signed Decree No. 604 on August 24, 2026, allowing the Russian government to forcibly take over private businesses—whether Russian or foreign-owned—if deemed necessary to secure critical infrastructure. Decree No. 604 uses the mechanism of temporary administration created in 2023 to take over assets owned by “unfriendly” investors and is similarly designed to be used on a case-by-case basis on the initiative of the president.

The decree marks a significant escalation in state intervention, with immediate ramifications for both Russian and foreign business interests. This LawFlash analyzes the core provisions, the legal mechanisms deployed, and the practical implications for companies operating in Russia.

BACKGROUND

Decree No. 604 “On Measures to Ensure the Security of Critical Infrastructure of the Russian Federation” comes amid a Ukrainian campaign of long-range drone strikes, some of which have reached targets hundreds of kilometers inside Russian territory. The stated purpose of Decree No. 604 is heightened concerns over the security of critical infrastructure during Russia’s so-called “special military operation.”  

Decree No. 604’s measures are built on mechanisms introduced by Decree No. 302 in April 2023, which authorized the temporary administration of assets owned by investors from countries Russia considers “unfriendly.” However, Decree No. 604 broadens the scope considerably, signaling a general policy applicable to any business operating in Russia.

SCOPE AND MECHANISMS OF DECREE NO. 604

Under Decree No. 604, the president may instruct the government to impose a forced takeover of any private business—whether Russian or foreign–owned—when certain triggering conditions are met. The mechanism of takeover is the imposition of “temporary administration,” a process previously outlined by Decree No. 302.

Decree No. 302 targets assets owned by investors from “unfriendly” states as a retaliatory measure against the USA and other states introduced sanctions against Russia. Decree No. 604 is justified by the stated need to address “increasing threats to critical-infrastructure security” and is applicable to any business if the president determines that it poses a risk to critical infrastructure.

TRIGGERING CONDITIONS FOR TAKEOVER

Temporary administration may be imposed under Decree No. 604 if a business entity

• fails to take, or is late in taking, measures to secure critical infrastructure;
• ·violates applicable security requirements;
• poses a threat to the security or normal operation of critical infrastructure facilities (explicitly including ineffective measures against unmanned-aerial-vehicle (UAV) attacks); or
• fails to restore, or is late in restoring, the operation of such facilities.

These conditions are intentionally broad and vague, granting authorities wide discretion in determining whether a company’s actions or omissions warrant state intervention. Note that, per a literal reading, even a business that does not possess any “critical infrastructure” assets could fall under Decree No. 604 effect if its operation is somehow considered affecting such assets security.

DEFINITION OF CRITICAL INFRASTRUCTURE

Decree No. 604 defines “critical infrastructure” expansively, covering facilities in the fuel and energy sector, industrial facilities, communications, public utilities, transportation, logistics, energy (including nuclear), life-support systems, as well as any other facilities deemed important for the nation’s security, economic stability, or the population’s well-being. This purposely broad language enables application to a vast array of industries and assets.

WHO DECIDES AND WHAT ASSETS ARE AFFECTED

The president decides whether to impose or discontinue temporary administration, by instructing the government to act. The scope of affected assets is broad, including both movable and immovable property located in Russia, securities and interests in corporate capital, and property rights.

ADMINISTRATION AND CONTROL

By default, Russia’s Federal Agency for State Property Management (known as Rosimuschestvo) is appointed as the administrator, exercising all owner’s powers except for disposal of the property. The administrator is responsible for inventory, safekeeping, and management, and is funded from the income generated by the seized assets. However, the president may instruct the government to designate any another administrator.

Notably, in a considerable number (roughly two thirds) of the cases of the Decree No. 302 takeovers, Rosimuschestvo was not an administrator. Rather, Russian commercial groups often (but not necessarily) engaged in the same line of business as the administered company acted in this role.

IMPLICATIONS

Decree No. 604 can be interpreted as requiring businesses to arrange and pay for their own protection against UAV attacks and apply extraordinary measures to restore operations halted by such attacks. While Decree No. 604’s imposition of temporary administration is framed as a protective measure for national security and economic stability, the breadth of discretion and the absence of meaningful checks suggest that even compliant businesses could be at risk.

Time will tell how well the implementation of Decree No. 604 will align with its stated purpose. For reference, reportedly some of Decree No. 302 takeovers did not appear to match that decree’s stated policy goals.

Notably, the decree’s broad and undefined terms—such as what constitutes a “threat” or “ineffective measures”—mean that virtually any business in sectors touching critical infrastructure or in sectors Russia considers important could potentially face temporary administration. This creates yet another Russian unpredictable risk, affecting domestic Russian business as well as business owned by foreign investors, whether “unfriendly” or not “unfriendly.”

The issuance of Decree No. 604 represents a significant expansion of state power over private enterprise in Russia and introduces additional legal risks for both Russian and foreign entities operating in Russia.

HOW WE CAN HELP

For foreign investors and multinational business, it is critical to assess exposure within Russia and to monitor for further implementing regulations or actions under Decree No. 604.

Our lawyers advise multinational companies, investors, and financial institutions on Russia-related transactions, sanctions, countersanctions, restructurings, and cross-border disputes. We stand ready to assist businesses in evaluating risks arising from Russian law and countersanctions and navigating compliance with applicable US, EU, UK, and other sanctions regimes.